Having a high credit score has many benefits. Here are the main ones you need to know. (iStock)
In essence, your credit score is an indicator of how likely you are to pay your bills. As a result, those with a high credit score generally find it easier to get approved for new financial products and also receive the best interest rates. Generally, any FICO score above 670 is considered a good score.
Not sure where you fit the credit score spectrum? Then, you should start using a credit monitoring service to track changes in your credit score. Credible can help you set up a free service today.
If after checking you still need more inspiration to convince you to build your credit, read on.
What can I do with a good credit score? 5 benefits
Here are five reasons why it is worth increasing your score as much as possible.
- Secure a low interest rate loan
- Qualify for a refinance
- Lower insurance premiums
- It is easier to rent a house
- Credit card rewards
1. Get a loan with a low interest rate
In fact, thanks to the coronavirus pandemic, today’s rates are at record levels. However, if you want to qualify for lower interest rates, you will need to have an excellent credit score.
To see where you fit, look for a credit monitoring service. Credible partners can help you find your credit score, history, alert you to possible fraud and more.
Here are some types of loans that require good credit.
Mortgages: If you are considering buying a home, you will need to obtain a mortgage and your credit history will play a big role in determining the interest rate you will receive on the loan. To find the lowest possible rate, your best bet is to shop. Visit Credible to compare rates and mortgage lenders.
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2. Qualify for a refinance
If you already have a loan, but still want to take advantage of the latest rates, you can think about refinancing. Refinancing involves taking out a new loan on better terms and using it to pay off the old one. Usually, when people talk about refinancing, they are referring to mortgages or student loans.
Mortgage refinancing
At the time of the report, home loans with fixed interest rates are as low as 2.71% for a 30-year loan, or 2.26% for a 15-year loan, according to Freddie Mac. loans with variable interest rates are an average of 3.16% for a 5/1 year ARM.
You can explore your mortgage refinancing options using Credible to compare rates and lenders.
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Student loan refinancing
According to Credible, students with a credit score as low as 650 can refinance their student loans at a variable rate of 2.71% with a co-signer or a fixed rate of 3.70% with a co-signer . However, if you have a credit score of at least 770, you can enjoy variable rates of up to 2.39% or fixed rates of up to 2.79%, without anyone else being on the loan.
Use an online tool like Credible to see what rates are available to you and to compare multiple creditors at once.
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3. Lower insurance premiums
In addition, having a higher credit score can mean that you pay less for auto and home insurance. In fact, according to a study by InsuranceQuotes.com, drivers with poor credit scores pay up to 91% more for auto insurance than those with excellent credit scores. A similar study found that having a reasonable credit score can add up to 29% to your home insurance premium.
With Credible, you can compare home and auto insurance, including their rates and fees. See if you are paying more than necessary and if it is worth switching insurers.
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4. It is easier to rent a house
Often, before the landlord allows you to sign a lease, he checks your credit report. Since your credit score is an indicator of how likely you are to pay your bills, those with excellent credit are more likely to have their rental orders accepted.
Homeowners are required to pay their mortgage regardless of whether you pay rent. With that in mind, many homeowners assess a potential tenant’s credit score because they don’t want to worry about having to raise funds for the mortgage payment in real time if the tenant fails to pay.
Use a credit monitoring service to determine if your credit is strong enough to qualify to rent a home.
5. Credit card rewards
Finally, people with high credit scores tend to find it easier to take advantage of credit card rewards. Simply put, if you do not need to have a card with a APR period of 0%, you are likely to qualify for other reward options, such as a refund or redeemable travel miles.
Credible in the online marketplace can help you compare different types of reward cards, including various fees and accompanying fees. Use Credible’s free online tools to find the credit card recommended for your needs.
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